For several years, banking and finance institutions have been providing customers with the option of switching their purchases into EMIs. This means that the customer has the option of funding a purchase through a credit card in equal monthly installments. The choice of converting one's purchases to EMI can be particularly beneficial when making high-value investments via a credit card. You might not want to make a lump sum payment. In such cases, the EMI option comes very handily, and it enables you to pay for the high-end purchase in EMIs. The repayment amount can be repaid in portions in the form of EMI which are not only convenient but also easy on the wallet. Various banks have started providing customers with the option of making payments for their purchases through EMIs, enabling them to make purchases without paying a lump sum amount at one go.
Advantages of Converting Purchases to EMIs
Some of the benefits of converting purchases into EMI are described below:
Manageable Financing Option
The financial option of EMI lessens the financial burden on the payer, and it prevents the person from getting into a huge debt. Over a period, the individual will be able to pay the debt. This could help the borrower to manage their finances better.
If the payer chooses to pay the amount through EMIs, he/she won't be incurring huge debt. The amount that is saved through this process can be saved, and the person can earn interest on it.
Improves Credit Profile
With the need for making a large payment towards the credit card debt, there are fewer chances of a borrower defaulting with the payments. Thus timely payment through EMI can improve the credit score of an individual immensely.
Attractive Rates of Interest
Banks and other lending institutions which provide the facility of converting the purchases to EMIs typically offer quite affordable interest rates. As we know, all EMI payments carry a specific interest rate, when someone makes the payment through EMIs, the interest rate applicable to the payment is lower. There are also situations when the bank might not levy interest on purchase through EMI.
Flexibility in Repayment Tenure
Customers can choose their tenure of payment when they want to make the payment. Usually, the repayment tenure ranges from 3-12 months. For banks like ICICI, HDFC, SBI, CitiBank, the tenure options are very flexible.
Minimal to Zero Paperwork Involved
The purchases that are converted to EMI, there is minimal paperwork involved. So, EMI purchases are generally more convenient for the customers as well.
Key points to remember before applying for a credit card
Mastering how to use your credit card will not only increase its usability but will also offer you with a lot of perks in the long run. To learn about the factors that could impact the usability of your credit card and minimize the costs linked with the credit card usage, you can check the list mentioned below:
Every credit card doesn't provide EMI facility
The first step for availing the EMI facility of a credit card is detecting beforehand whether the credit card is eligible for the benefit. If it is suitable, you should learn about the terms and conditions for the usage of the credit card to avoid any miscalculation in the future.
Availing the EMI payment facility can impact the credit limit
Many borrowers are often under the impression that the EMI facility doesn't affect their credit card limit. If an individual purchases EMI mode using the credit card, the credit limit gets reduced to the difference between the cost of the commodity that is purchased and the credit limit available on the card.
The EMI processing fee can be negotiated
Customers who have a solid credit score and high brand loyalty could be eligible for receiving a discount on the processing fee.
The prepayment penalty might be waived
In several credit cards, the customer may be charged a penalty fee based on the outstanding debt for prepaying the loan. A customer can negotiate with the bank to get his/her fee waived if he/she has a strong credit score and they are a loyal customer of the company.
You should try to make more online purchases
To promote their sales online, many retailers have tie-ups with banks to provide various offers. With this move, online sellers try to attract more customers to make online purchases. If you intend to purchase an item through the EMI option of your credit card, you must check for offers and discount to get a better deal on the purchase. You can also avail an additional discount on the retail cost with a better payment option.
Never leave any outstanding balances on your credit card debt
To avoid being charged any penalty and additional interest amount, you should always clear your credit card debt in full on the due date. Sometimes customers think that a monthly increment of the interest rate of 2-3% is less, but it multiplies to 25-40% annually
What Can Be Converted
There is a vast category of items that can be paid through EMI with a credit card. Various banks may have a different group of items that can be covered using an EMI. Some of the categories that have an option of EMI include electronic devices, travel expenses, apparels, lifestyle-related expenses, insurance expenses, etc.
What Is Not Covered
Most of the banks don't allow the customers to make EMI payments for the purchase of jewelry and expensive metals like gold, silver, etc.
How to Convert Purchases to EMIs
You can follow the basic steps described below to convert the purchases into EMI:
- Make a purchase. Most of the banks specify the value above which the purchase made can be converted into EMI
- After you have made the purchase, contact the bank to place the request for converting it into EMI or manually check it on the website.
- The bank calculates the interest rate applicable on the EMI
- Choose the tenure which is convenient for you.
- The EMIs payable will be chargeable to your credit card which provides the customer with greater convenience.
- You might be charged with a processing fee at the initial stages of the EMI transaction.
Banks Allowing Customers To Convert Purchases to EMIs
Many banks in the country allow their customers to convert their purchase in the form of EMI. Most of these purchases are high valued purchases. Some of the banks that provide such facility are HDFC Bank. IndusInd Bank, ICICI Bank, Axis Bank, CitiBank, Kotak Mahindra Bank, etc.